SEC to consider several Stanford-related actions

At their meeting Thursday, members of the Securities and Exchange Commission will consider several legal actions related to the Stanford Financial case.

In a closed-door session, commissioners are scheduled to vote on a settlement involving Spencer Barasch, the former head of enforcement for the SEC’s Fort Worth office, Reuters reported. Barasch is expected to settle Justice Department civil charges that he inappropriately represented Allen Stanford, the news wire said. Barasch, who’s now in private practice in Dallas, will pay a $50,000 fine, agree to a six-month ban from practicing before the commission and won’t admit or deny wrongdoing, Reuters said, citing unnamed people familiar with the settlement talks.

The SEC’s inspector general issued a report in 2010 that found Barasch was involved in repeated efforts within the Fort Worth office to quash investigations into Stanford’s activities and later asked for permission to represent Stanford after leaving the SEC. The SEC turned down the requests. Stanford eventually did do a few hours of legal work for Stanford, reviewing a single contract.

The SEC claims the brokers ignored indications that they were selling fraudulent products to clients, such as the certificates of deposit issued by Stanford’s Antiguan bank, Bloomberg said. The CDs promised above-market returns for customers and inflated commissions for the brokers who sold them.

One of the brokers on the list is Bernerd Young, Stanford’s former chief compliance officer who previously led the Dallas office of the National Association of Securities Dealers, the brokerage industry’s self-policing regulator. Young now works for Magnolia-based MGL Consulting.

In a statement issued after Bloomberg’s story Tuesday, MGL’s founder and president, Melinda LeGaye, said Young has cooperated fully with the SEC’s investigation and that SEC staff has “repeatedly changed its focus in an attempt to secure commission authorization to bring formal action against him.” Any action by the SEC will be “met with a fierce and aggressive defense,” LeGaye said.

The SEC, it seems, is stepping up its own legal activity even as the Justice Department prepares to try Allen Stanford himself later this month on criminal charges that his firm, which collapsed in 2009, was a $7 billion Ponzi scheme.

3 Responses

About time! Nobody seems to want to report on the fact that Barasch’s new firm, Andrews Kurth, now represents many of the former Stanford Financial Advisors in defense of their clawback suits brought by the Receiver. I guess ol’ Spence found a way to make $ from the Stanford fiasco, after all…